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Tough Challenge

The novel coronavirus outbreak has been getting worse across the globe. While government of different places have stepped up their response measures, it is still hard to tell when the epidemic could be brought under control. Nonetheless, impacts on the global economy has already come to surface. The global supply chain and logistics have been disrupted, and the flow of people and commercial activities have been substantially suppressed, leading to severe reduction in market demand and consumption.

Various international organisations have recently revised downward the global economic growth forecast of this year. The Organisation for Economic Co-operation and Development (OECD) lowered its global GDP forecast of 2020 by half a percentage point to 2.4 per cent, which is the lowest growth since the 2009 global financial crisis. At the same time, it adjusted downward the GDP growth of China to 4.9 per cent, a 0.8 percentage point drop from its original forecast. For the US, the expected GDP growth was reduced by 0.1 percentage point to 1.9 per cent. OECD also indicated that global growth could be slowed down to as low as 1.5 per cent if the spread of the virus continues. In parallel, the International Monetary Fund (IMF) some weeks ago also revised downward its annual global GDP growth forecast by 0.1 percentage point to 3.2 per cent, and stated that there would likely be further adjustments in the coming weeks.

Given the increasing downturn risk for the global economy, many central banks including those of the US, Canada, Australia and Malaysia, have increased their money supply by cutting down interest rates, ranging from half a percentage point to quarter of a percentage point. In the US, the emergency rate cut pushed through by the Federal Reserve before its upcoming regular meeting has sparked market speculations. With the series of rate cut, major global stock markets tumbled in the last week, reflecting market’s worry over economic prospect and investment confidence. Different countries are now working at their best to fight against the virus. Investors’ confidence and sentiment would hinge on the further development of the epidemic.

As the global economy is going through a stormy weather, it becomes more and more challenging for Hong Kong’s economy to recover from the recession last year. To boost local consumption and revitalise the economy is our top objective. I have therefore announced in the Budget a series of counter-cyclical measures amounted to $120 billion in total in order to provide support for the already-frozen market.

Among all the measures, I have decided, in particular, a cash payout of $10,000 to Hong Kong permanent residents aged 18 or above, with a view to boosting local consumption and relieving people's financial burden. We are now working at full speed to take forward the scheme, including the arrangements for application through e-banking and printed forms, collection of applications and cash disbursement. We have been working with the banking industry on the establishment and testing of the relevant system, with a view to developing a simple and convenient mechanism while ensuring personal data privacy and protection. Our current plan is to accept application by early July and to start the disbursement in the summer holiday.

To expedite the cash payout process, we would make the application procedure and eligibility criteria as simple as we can. Those meeting the above criteria (i.e. Hong Kong permanent residents aged 18 or above) on or before March 31, 2021, i.e. by the end of the 2020/21 fiscal year will be eligible to apply. To facilitate citizens who could only meet the eligibility criteria close to March 31, 2021, we have set the application deadline at December 31, 2021 so that they can have sufficient time to renew their ID card for the application.

Fighting against the epidemic is now our top priority. Once the epidemic is over, how we could boost the local consumption and revitalise the economy in full strength would be another big challenge for us to tackle, which requires mutual co-operation among different sectors of the community. We will liaise with the business community and encourage them to roll out concessionary campaigns, so as to benefit the community and maximise the effectiveness of the $70 billion cash payout scheme. I also hope that members of the community can work together to put aside differences, make room for reviving the economy, so that businesses could overcome this testing time as soon as possible and the unemployment and underemployment situation can be relieved.

March 8, 2020